As expected, Spain's national telco, Telefonica, has aligned itself with Concert, the BT-MCI consortium offering multinational telecomms services in Europe. Unisource, the AT&T-led rival group, in which Telefonica has a 25 per cent stake, immediately demanded that the Spanish company withdraw from membership.
AT&T, which said it "regrets" the Telefonica decision, is said to be looking for a new strategic partner to take the Spanish telco's stake and redress the balance of power, which has now swung in Concert's favour. Unisource is also said to be considering legal action against Telefonica. Ben Verwaaye, chairman of Unisource, claimed the action was "in breach of the terms, conditions and spirit of the alliance".
The Spanish company retorted that its new tie-up does not violate the terms of the Unisource agreement but it did plan to withdraw from the grouping as soon as this could be arranged with the partners.
The main importance of Telefonica to the various telecomms groupings - the third contender, Global One, was also wooing the company - lies not in Europe but in the potentially massive Latin American market, which is mainly Spanish-speaking. BT and MCI see Telefonica as a valuable ally in penetrating this region. They also signed up Portugal Telecom last week, giving them a headstart in Portuguese-speaking Brazil, while the two Iberian telcos also signed their own agreement last week to work collaboratively in south American ventures.
BT chairman Iain Vallance said the new strength of Concert on the international stage will also make BT more attractive as a partner to a major player, such as Japan's NTT, in the Asia-Pacific region, the UK giant's weakest point.
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